Costco Wholesale Corporation (COST) vs Walt Disney Company (The) (DIS): Which Is the Better Buy in 2026?
As of 2026-08-03, COST is overvalued at $952, with a DCF intrinsic value of $452 and a margin of safety of -111%. DIS is undervalued at $96, with an intrinsic value of $254584003147 and a margin of safety of 100%. Of the two, DIS has the wider margin of safety.
Rewards
- ★Costco Wholesale Corporation has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
- ★Costco Wholesale Corporation scores 96/100 on the Economic Moat Score (Wide Moat), with roic consistency as the strongest competitive dimension.
- ★Free cash flow has grown at a 30.8% CAGR over the past 4 years, demonstrating strong earnings power growth.
- ★Free cash flow has grown at a 111.4% CAGR over the past 4 years, demonstrating strong earnings power growth.
- ★Each dollar of retained earnings has created $6.06 of earning power — management is an exceptional capital allocator.
- ★Management has timed buybacks well — 2 out of 2 years showed value-accretive repurchases.
Risks
- ⚠Gross margin of 12.9% is low, suggesting a competitive or commodity-like market with limited pricing power.
- ⚠Despite buyback spending, shares outstanding increased in 3 out of 4 years — stock-based compensation is offsetting repurchases.
- ⚠FCF yield of 1.6% is below 3%, meaning the market is pricing in substantial future growth to justify the current price.
- ⚠PEG ratio of 2.24 indicates the stock is expensive relative to its expected growth — the market may be pricing in more growth than analysts project.
- ⚠Altman Z-Score of 1.08 places the company in the distress zone — financial patterns resemble those of companies that experienced bankruptcy.
Key Valuation Metrics
Learn more →Historical Fundamentals
Learn more →Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
$1 Retained Earnings Test
Learn more →> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Discounted Cash Flow (DCF) Analysis
Learn more →Reverse DCF — Market-Implied Growth
Learn more →What growth rate is the market pricing in at $952?
The market implies +20.8% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding +22.9%, reflecting heavy growth investment.
What growth rate is the market pricing in at $96?
The market implies -18.7% Owner Earnings growth, below historical trends — potential opportunity.
Standard FCF implies a more demanding -15.2%, reflecting heavy growth investment expected to generate future returns.
Economic Moat Score
Learn more →Wide moat with strength across all dimensions. ROIC Consistency is the standout factor.
Narrow moat with revenue predictability as the key competitive advantage. Improving roic consistency would strengthen the moat.
Forensic Accounting
Learn more →M-Score Trend
M-Score Trend
Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
Ownership Breakdown
Learn more →High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.
Insider Buying Activity
Learn more →Open market purchases · includes direct & indirect ownership · excludes option exercises.
Insider Selling Activity
Learn more →Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.
🎭 Mr. Market's Mood
Learn more →"Market is pricing this stock without strong emotion in either direction"
"Market is pricing this stock without strong emotion in either direction"
Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
⚖️ Buffett Signal
Learn more →The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
Frequently Asked Questions: COST vs DIS
Is Costco Wholesale Corporation or Walt Disney Company (The) more undervalued in 2026?▼
Based on our discounted cash flow model, DIS trades at a 100.0% margin of safety (intrinsic value $254584003147 vs. price $96), compared to COST's -110.8% margin of safety (intrinsic $452 vs. $952).
Which stock has a wider economic moat, Costco Wholesale Corporation or Walt Disney Company (The)?▼
COST scores 96/100 (Wide moat), while DIS scores 51/100 (Narrow moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Is Walt Disney Company (The) in financial distress?▼
DIS's Altman Z-Score of 1.1 places it in the Distress zone, signaling elevated bankruptcy risk. COST scores 9.2 (Safe zone). The Altman Z-Score is a five-factor model that predicts insolvency within two years; scores below 1.81 indicate significant distress.
Which company has better free cash flow, Costco Wholesale Corporation or Walt Disney Company (The)?▼
Costco Wholesale Corporation (COST) generates a 1.6% free cash flow yield, compared to Walt Disney Company (The)'s 0.0%. A higher FCF yield means the business converts more of its market value into cash that can be returned to shareholders or reinvested.
Which stock has higher return on invested capital, Costco Wholesale Corporation or Walt Disney Company (The)?▼
COST earns 31.3% ROIC versus DIS's 7.3%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.
Which dividend is safer, Costco Wholesale Corporation's or Walt Disney Company (The)'s?▼
DIS's dividend earns a safety score of 88/100 (Very Safe), compared to COST's 85/100 (Very Safe). DIS has raised its dividend for 1 consecutive years.